Comprehensive Economic Development Strategy Capital Area Economic Development District Updated July 2013

Transcription

1 Compre ehensive Economic Development Strategy Capital Area Economicc Development District Updated July 2013

2 2013 by Capital Area Economic Development District, all rights reserved. Capital Area Economic Development District 6800 Burleson Road, Ste. 165 Bldg. 310 Austin, TX

3 Table of Contents I. Introduction... 4 II. Background... 5 Population Growth... 5 Job Growth... 7 Unemployment Rate... 9 Educational Attainment and Wealth... 9 III. Analysis of Economic Development Problems and Opportunities Data Analysis Economic Clusters IV. CEDS Goals and Objectives V. Community and Private Sector Participation VI. Projects, Programs, and Activities VII. CEDS Plan of Action VIII. Performances Measures IX. Updates to the CEDS

4 Capital Area Comprehensive Economic Development Strategy I. Introduction Every five years CAPCOG staff ramps up our economic development planning by calling a meeting of the CEDS Committee. Inevitably, the same questions are asked: what is a CEDS, what is its presumed purpose, do local economic developers have to follow it, and what happens to it after it s adopted? This document is done to fulfill a requirement of the Economic Development Administration, U.S. Department of Commerce, for the planning funds received by the Capital Area Council of Governments as a designated Economic Development District (EDD). The Capital area consists of ten counties in central Texas, including the Austin Round Rock San Marcos Metropolitan Statistical Area (MSA). EDA requires that a Comprehensive Economic Development Strategy or CEDS be done every five years, ideally with annual updates as appropriate. There is currently a lot of discussion at the EDA Headquarters in Washington D.C. about best practices for the CEDS, a document which has been intended to serve as a region s economic development plan. Those discussions have centered on how the EDDs can use the CEDS to add the most value to their region s economic competitiveness. The funding provided to the EDDs is modest; nevertheless many EDDs across the U.S. have enthusiastically broadened their CEDS to include transportation and environmental issues, to address housing and land use, and to strengthen education and healthcare strategies. For some smaller regions, the CEDS ends up being the only regional plan for growth thus taking on an important role for shaping strategies of local governments. In larger metro regions like ours, the CEDS is but one of many plans being developed and must find a niche for how it can add value. The goal of this CEDS process wasn t to produce a 150 page report that would just occupy space on a shelf, rather it was written concisely to hopefully influence decisions being made that can impact the broader region, whether they are implemented by a city, county, or regional stakeholder. Our past CEDS plans were ambitious and addressed many of the issues mentioned above but with only two staff members working on economic and community development, the impact is limited. CAPCOG s CEDS has also moved away from an emphasis on multiple projects and now focuses more on providing data and support for good policy decisions at all levels. Our CEDS is not intended to provide guidance to individual cities about what they need to be doing in their economic development programs; rather we believe our role is to look at our region as unit of cities and counties that compete globally for employers and workers. The Austin Metropolitan Region is a collection of cities, suburbs, and rural areas that are becoming increasing interdependent economically; Census data show 77 percent of workers in this region cross a county line to get to their jobs. A recent article in Citiwire discusses why some regions are so attractive, including Austin. The traditional economic development issues still are considered real estate costs, taxes, and labor costs but also significant is an entrepreneurial environment made possible by the talent pool, university collaboration, and support for new growth. Interpret this to mean that a region has a better chance for a robust economy if it mixes entrepreneurship and innovation into established as well as start up businesses. These knowledge based businesses pay the best wages, depend on a well educated workforce, and thus, don t move overseas. 4

5 So the CEDS acknowledges this trend and focuses on four goals that support it those goals address workforce, entrepreneurship, economic competitiveness, and advocate for growth of clean energy as a knowledge based industry. II. Background Population Growth The Capital Area is a growing region with an economy that is performing well overall compared to other U.S. regions. The region is gaining an average of 49,000 residents per year and growing nearly twice as fast as the Texas population and nearly four times as fast as the U.S. population. 1 Since 2000, the population in the Capital Area has increased almost 35% from 1,346,833 to an estimated population of 1,816,818 in % 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Texas U.S. Capital Area Annual Population Growth Rates Over the past decade, the Austin Round Rock San Marcos Metropolitan Statistical area (MSA), which consists of Travis, Williamson, Hays, Bastrop and Caldwell counties, registered the eighth fastest growth rate in the nation and ranked twelfth in the number of new residents added. As a result, the metro area is now the 35 th largest in the nation. In addition to the rapid growth within the core of the region, the remaining five counties, Blanco, Burnet, Fayette, Lee, and Llano are also experiencing steady growth. 2 Although the City of Austin adds the most number of new residents than any other city in the region on average 13,000 people per year over the past decade, 71% of the growth has occurred outside Austin during this period of time. For every 100 hundred new residents in the Capital area, 29 are in Austin; 11 in Round Rock; 7 in Cedar Park; 5 each in the four cities of Kyle, Georgetown, Pflugerville, San Marcos; 4 in Leander; 3 in Hutto; 13 in all other cities and towns; and 13 in unincorporated portions of the counties. 3 1 Texas State Data Center, U.S. Census Bureau 2 U.S. Census Bureau 3 U.S. Census Bureau 5

6 Approximately 92% of the region s growth during this period has occurred along the IH 35 corridor in Hays, Travis, and Williamson counties, which combined contain approximately 88% of the region s population. Throughout the decade, both Williamson and Hays counties consistently made the lists of the fastest growing counties in the state and nation. From the period 2000 to 2009, Williamson County experienced a 64.3% growth rate, the ninth fastest in the entire nation and Hays County at 59.4% was fifteenth. 4 By comparison, the United States averaged a 9.1% growth rate and the state of Texas a 15.9% rate during the same period of 2000 to The table below shows the growth for each county in the region over the past decade. The majority of the region s growth stemmed from net migration. In fact, 67.6% of the growth occurring from 2000 to 2009 was the result of individuals moving to the region. Natural growth (births minus deaths) played a much smaller role and in some counties such as Fayette and Llano, there were more deaths than births. The residual difference are changes in the population that are not directly attributable to demographic change and may be the result of methodology. Components of Population Change, Entity Estimate Base 2000 Estimate 2009 Numeric Change Natural Increase Net Migration Residual Difference Bastrop 57,716 74,876 17,160 3,990 13, Blanco 8,418 9, Burnet 34,164 45,149 10, , Caldwell 32,185 37,810 5,625 2,301 3, Fayette 21,819 22,891 1, , Hays 97, ,545 57,963 10,905 47, Lee 15,657 16, Llano 17,031 18,274 1,243 1,066 2, Travis 812,284 1,026, , , ,762 4,541 Williamson 249, , ,707 37, , CAPCOG 1,346,835 1,816, , , ,675 5,171 4 U.S. Census Bureau 5 U.S. Census Bureau 6

7 There are many population projection scenarios available, but perhaps the best one for short term planning is the State Data Center s Scenario , which uses migration trends from that period. Under this scenario the Capital Area region will surpass the 2 million mark within the next few years; and by 2015, the projected population will be 2.1 million, an increase of 16.8% from the 2009 estimate. All counties within the region will experience growth in the next five years according to this scenario. Population Projections, Entity Percent Increase Bastrop 81,717 96,023 18% Blanco 10,348 11,421 10% Burnet 47,581 55,375 16% Caldwell 38,724 42,280 9% Fayette 25,232 27,314 8% Hays 164, ,397 25% Lee 18,119 19,335 7% Llano 19,344 20,456 6% Travis 992,773 1,082,986 9% Williamson 435, ,673 29% CAPCOG 1,833,271 2,120,260 16% Job Growth Job growth in the Capital Area is outpacing both the state and the U.S. economy. Regional employment has increased by 3.5% per year since 2002 or 31,500 net new jobs on average compared to 2.4% in Texas and 1.1% in the U.S. 7 The table below summarizes job growth by 2 digit North American Industry Classification System (NAICS) codes from Jobs by Industry for Capital Area region, Description Percent Increase '02 10 Percent Increase '10 15 Agriculture, forestry, fishing & hunting 18,278 17,849 17, % 0.3% Mining 7,303 12,022 13, % 14.0% Utilities 2,204 2,626 2, % 3.2% Construction 60,397 71,602 84, % 18.2% Manufacturing 68,489 57,265 56, % 0.6% Wholesale trade 38,157 48,180 52, % 8.5% Retail trade 90, , , % 8.6% Transportation and warehousing 19,213 22,428 24, % 9.3% Information 27,397 27,548 30, % 9.0% Finance and insurance 42,668 60,731 68, % 13.3% 6 Texas State Data Center 7 EMSI 8 EMSI 7

8 Real estate and rental and leasing 37,520 66,290 79, % 20.3% Professional and technical services 75, , , % 18.0% Management of companies 5,168 6,758 7, % 11.8% Administrative and waste services 53,195 70,148 82, % 17.1% Educational services 13,043 20,233 24, % 19.0% Health care and social assistance 66,212 91, , % 16.2% Arts, entertainment, and recreation 19,098 27,119 31, % 15.2% Accommodation and food services 61,446 85,476 95, % 12.1% Other services, except public administration 43,195 59,450 64, % 9.0% Government 151, , , % 9.8% Total 900,266 1,152,374 1,296, % 12.5% Industries such as professional/technical services and health care have added 25,000 or more jobs during the last eight years. Other big gainers include government, which added over 28,000 jobs, accommodation and food services, 24,000; and retail trade, 20,000. Like many regions across the country, manufacturing has been declining with 11,000 fewer workers in that industry since While employment levels have declined sharply from their peaks a decade ago, the Capital Area remains one of the most competitive regions in the U.S. for technology manufacturing industries, such as semiconductors and testing instruments. The fastest growing industry in the region from 2002 to 2010 in terms of percent increase in number of jobs was the real estate and rental/leasing industry with an increase of 77%. Mining, educational services, and professional and technical services all grew by over 50% during this period. 9 Government jobs made up the largest percentage of the total jobs, while professional and technical services and retail trade were second and third. The following chart shows the distribution of jobs in each industry compared to the total number of jobs in Jobs by Industry for Capital Area region, EMSI 10 EMSI 8

9 The transition to technology services system design, software as a service, custom programming has already found solid footing in the Capital Area and will help the region retain its competitive advantage. Finally, the Capital Area is well positioned to take advantage of expected growth in emerging sectors such as renewable energy and clean technology. Forecasts indicate that the Capital Area could gain more than 12,000 jobs in green industries between 2010 and Unemployment Rate The Capital Area has experienced job losses during the current recession that began at the end of Although the 2009 annual unemployment rate was at 6.9% compared to 3.1% in 2000, the rate has remained at levels that are better than both the national and state rate. There are 40,000 more unemployed people in the Capital region from 2000 to 2009; however, the labor force has also grown by 20% during that same timeframe. The graph on the next page summarizes the unemployment rate for the nation, state, and region since % 9% Annual Unemployment Rate U.S. 8% Texas 7% 6% 5% Capital Area 4% 3% Educational Attainment and Wealth The Capital Area, which includes the Austin Round Rock San Marcos Metropolitan Statistical Area (MSA) plus Blanco, Burnet, Fayette, Lee, and Llano counties, is routinely found among the leaders in best of lists offered by Forbes, Kiplinger, Brookings, and others. 13 Yet, the region has its challenges. For example, a significant portion of the region s job growth has occurred in industries with relatively low average wages, such as retail, restaurants, hotels, and other local services. While job growth in those industries is better than no job growth at all, it s resulted in a concerning trend: Austin Round Rock San Marcos has ranked near the bottom of all U.S. metro areas in average earnings and per capita income growth. In fact, the region s per capita income fell from 103 percent of the U.S. average in 2001 to 93 percent of 11 EMSI 12 Texas Workforce Commission 13 For example, see Forbes Best Places for Business and Careers 2010 edition where Austin Round Rock was ranked #10. places for business beltway business places 10_lander.html. 9

10 the U.S. average in High wage job creation and renewed focus on workforce skills will be needed to reverse that trend. Educational attainment is another area that needs attention. Austin Round Rock San Marcos MSA bills itself as The Human Capital, and it s true that the region compares favorably to other U.S. metros on rankings such as percentage of population age 25+ with at least a bachelor s degree. However, that overall statistic for the region hides glaring disparities between race/ethnicity groups. Seventy one percent of Asians age 25+ in the Austin Round Rock San Marcos MSA have a completed postsecondary degree, compared to 54 percent of Whites, 31 percent of African Americans, and 21 percent of Hispanics. 14 Hispanics have accounted for 47 percent of the region s population growth since 2001, and they are projected to be the fastest growing segment of the region s population for the foreseeable future. With more and more high wage jobs requiring some form of postsecondary education, the region must close these gaps and continuously improve educational attainment for all groups if it hopes to maintain a world class workforce. Educational Attainment by Race/Ethnicity for Population Age 25+ in Austin Round Rock San Marcos MSA, Asian Black Hispanic White No H.S. Diploma or GED 8% 13% 36% 5% H.S. Diploma or GED 12% 28% 25% 17% Some college, no degree 9% 28% 18% 24% Associate's degree 5% 8% 5% 8% Bachelor's degree 32% 16% 12% 30% Graduate degree 34% 7% 5% 17% Postsecondary degree 71% 31% 21% 54% As one of the fastest growing regions in the U.S., the Capital Area cannot become complacent by relying on population growth to drive its economic development. The region must pursue goals and strategies that align secondary and postsecondary education, economic development, and workforce development in a way that promotes innovation, creates high wage jobs, and improves quality of life in rural and urban communities. The region must also ensure that economic policies and programs are conducted in coordination with land use, transportation, and housing objectives. With no single agency responsible for all aspects of regional planning in the Capital Area, the region s success will depend on its ability to collaborate across city and county boundaries to address opportunities and challenges together. 14 U.S. Census Bureau 15 U.S. Census Bureau 10

11 III. Analysis of Economic Development Problems and Opportunities Data Analysis Considerable work has been done already analyzing the problems and opportunities of economic development in the Capital Area. In 2007, the Austin Chamber of Commerce published a detailed study and a strategic plan related to its Opportunity Austin program. 16 The Chamber is currently targeting five clusters under this plan: convergence technologies, creative media, green industries, corporate and professional headquarters or regional offices, and health care and life sciences. While the study was completed before the recession that began in December 2007, most of the opportunities and challenges identified in the report are still relevant today. Workforce competitiveness is another area receiving significant attention. Organizations such as E3 Alliance (Education Equals Economics) and the Ray Marshall Center for the Study of Human Resources at The University of Texas Austin are engaged in several innovative research projects that demonstrate the linkages between the classroom and the labor market. The Student Futures Project, for example, is a collaboration involving the Ray Marshall Center, Austin Chamber of Commerce, Texas Education Agency, and many of the region s school districts. 17 Researchers are linking secondary school records to college records and unemployment insurance records to track students as they move from school out into the workforce. The Student Futures Project and others like it are producing compelling evidence about the degree to which economic competitiveness is tied to education and workforce competitiveness and why the Capital Area must address them together in a comprehensive economic development strategy. The Capital Area Council of Governments (CAPCOG) is maintaining a comprehensive set of economic and workforce indicators on its website to provide data context to this Comprehensive Economic Development Strategy (CEDS). 18 The data is presented in the form of a regional asset map according to the framework described in Illuminate by the Council on Competitiveness. 19 The asset map provides an assessment of up to date regional indicators on topics such as human capital, capital availability, and metrics speaking to the region s capacity for innovation driven economic development. The asset map can be accessed on CAPCOG s Information Clearinghouse. 20 Economic Clusters Industry clusters are geographic concentrations of competing, complementary, or interdependent firms and industries that do business with each other and/or have common needs for talent, technology, and infrastructure. 21 The Capital Area s industry cluster profile is in a transition period. In a pattern that has repeated itself across the U.S., after peaking in 2001 at around 40,000 jobs, technology manufacturing CAPCOG staffs the CAEDD and is responsible for implementing CEDS activities mapping roadmap a guide to assessing regionaldevelopment resources 20 clearinghouse

12 employment has declined by approximately 50 percent. Some of the jobs went overseas and some of the jobs simply don t exist anymore. Yet, much of the Capital Area s former strength in computer and semiconductor manufacturing has transitioned into technology services, such as software as a service, computer and network system design, and consulting industries. 70,000 Jobs in Austin Round Rock San Marcos MSA, ,000 50,000 40,000 Computer/ Semiconductor Manufacturing (blue) 30,000 20,000 10,000 Professional, Scientific, & Technical Services (red) Source: Texas Workforce Commission, CAPCOG. Not seasonally adjusted. The Capital Area is also home to many emerging industry clusters, including renewable energy and clean technology. The Pecan Street Project, for example, is a public private partnership which includes Austin Energy, City of Austin, Environmental Defense Fund, Austin Chamber of Commerce, and the Austin Technology Incubator at The University of Texas at Austin that is establishing Austin as America s clean energy laboratory. The partnership has attracted participation from Dell, GE Energy, IBM, Intel, and many others to work collectively on the challenges of transitioning to a clean energy economy, including smart grid deployment, utility business models, commercialization of university research, and more. 22 There are many sources of information on industry clusters in the Capital Area. The Austin Chamber of Commerce s Opportunity Austin report presents data on their targeted industry clusters for the Austin Round Rock San Marcos MSA. Since the Capital Area encompasses ten counties instead of just the fivecounty MSA, two other industry cluster breakdowns are presented here using definitions from the Texas Governor s Office 23 and the Purdue Center for Regional Development. 24 The Purdue cluster data comes from Innovation in American Regions, funded by the Economic Development Administration

13 Industry Clusters Targeted by State of Texas in Capital Area Jobs 2010 Expected Growth Establishments Advanced Tech and Manufacturing 77,139 6,001 3,893 Aerospace and Defense 14,023 1, Biotechnology/Life Sciences 37,307 6,395 2,491 Info and Computer Technology 96,476 6,762 3,823 Petroleum and Chemical Products 6, Energy 62,731 12,942 2,793 Source: EMSI. Definitions from Texas Governor s Office and Texas Workforce Commission. Competitive Industry Clusters in Capital Area Establishments Jobs LQ Information Technology & Telecommunications 3,654 90, Business & Financial Services 9,448 79, Energy (Fossil & Renewable) 3,559 56, Biomedical/Biotechnical (Life Sciences) 3,434 41, Printing & Publishing 1,340 18, Source: Texas Workforce Commission. Definitions from Purdue University as listed on the Innovation in American Regions website. LQ stands for location quotient and is a measure of industry concentration. Table lists clusters with LQ > 1 indicating greater concentration than U.S. average. 13

14 IV. CEDS Goals and Objectives Goals 1. Develop a globally competitive workforce that encourages businesses to start, locate, and expand in the Capital Area Objectives a. Conduct collaborative planning activities with regional partners to promote alignment of economic and workforce development goals, including advocacy emphasizing postsecondary education and skills training to support high growth, high wage jobs b. Pursue funding opportunities with workforce partners to expand the availability of training programs for targeted industries and occupations c. Make labor market information more accessible to school districts and higher education institutions so students can make informed choices about career options 2. Make the Capital Area the most entrepreneur friendly region in the U.S. Objectives a. Support programs that encourage people of all ages to consider becoming entrepreneurs b. Ensure that entrepreneurs and small businesses have access to the resources they need to start and grow c. Generate awareness about the economic impact of entrepreneurs on the regional economy 3. Enhance the Capital Area s economic competitiveness Objectives a. Support the development of innovation based industry clusters that create high wage jobs b. Help communities implement economic development strategies that grow existing, locallyowned businesses and attract new companies to the Capital Area c. Encourage communities to adopt policies that create affordable housing options for people working in the community d. Support the formation and growth of export oriented businesses 4. Provide analytical and technical support for development of economically sustainable communities. Objectives a. Identify and promote projects in the Capital Area that support the development of economically resilient communities and neighborhoods b. Support the development of new technical resources that aid the evaluation of new or proposed development and its ability to enhance economic sustainability c. Collaborate with regional partners to encourage development that promotes sustainable economic development 14

15 V. Community and Private Sector Participation The Capital Area CEDS was created under the direction of a broad based committee that included representatives from government, higher education, workforce development, economic development, chambers of commerce, and the private sector. Business owners operating for profit enterprises represented 52 percent of the committee s total membership. Geographically, business members of the committee represented five counties including urban and rural areas. VI. Projects, Programs, and Activities 1. Publish an annual report that benchmarks the Capital Area against other U.S. regions to track economic development and evaluate the region s economic competitiveness 2. Provide venues for peer to peer learning about economic development for cities and counties, including Economic Development 101 workshops for elected officials 3. Publish reports for school districts that identify high growth, high wage job opportunities and relevant career and technical education that should be offered in the Capital Area Publish a how to guide with Pecan Street Project that can help communities pursue their own smart grid projects that result in economic development opportunities Maintain an interactive asset map on the CAPCOG website that gives communities access to the latest available data on economic conditions in the region 6. Assist communities with funding applications to the Economic Development Administration 7. Assist communities with data needs related to economic development Lead Organization CAPCOG will serve as the lead organization for the projects listed in this plan. CAPCOG will work with regional partners, including chambers of commerce, workforce development boards, school districts, higher education institutions, and others, to implement these projects during Funding In addition to the EDA planning grant and matching CAPCOG funds, these projects will be funded by a combination of workshop attendance fees, partnerships with local governments and other public agencies, and private sector donations or sponsorships where feasible and appropriate. Job Creation It s impossible to predict exactly how many jobs the CEDS will create. CAPCOG serves 10 counties, 70 cities, and approximately 25 economic development groups. CAPCOG s role is to provide data, strategy, and other types of assistance on economic development projects. CAPCOG work that results in jobs or private investment is recorded on the annual Government Performance and Results Act (GPRA) form submitted to EDA. Between 2005 and 2009, CAPCOG helped generate 699 jobs (created and retained), $478.4 million in private investment, and $20.8 million in public investment. 26 Achieve Texas 27 Pecan Street Project 15

16 VII. CEDS Plan of Action The Capital Area CEDS will be implemented in a way that aligns closely with other aspects of regional planning, including transportation, environmental protection, workforce development, broadband deployment, and physical infrastructure development. As one of 24 regional planning councils in Texas, CAPCOG engages in air quality monitoring and improvement strategies, disbursement of funding for solid waste mitigation and recycling programs, oversight of Community Development Block Grants, and a wide range of other regional activities. CAPCOG s role as staff for the CAEDD provides critical synergy between the CEDS and the region s broader needs as a growing community. The CEDS will support the State s economic development priorities through assistance provided to local governments in the Capital Area region. The State of Texas has identified six targeted industry clusters for development: advanced technologies and manufacturing, aerospace and defense, biotechnology and life sciences, information and computer technology, petroleum refining and chemical products, and energy. CAPCOG s assistance to communities in the region can include helping local officials identify opportunities for growing industries that correspond to the State s targeted clusters. CAPCOG can also serve as an intermediary for disseminating leads generated by state economic development staff and helping communities respond to opportunities where appropriate. VIII. Performance Measures CAEDD will use the following performance measures to evaluate its CEDS during : Number of jobs created or retained in the region Amount of private investment in the region Number of business formations and expansions in the region Number of people receiving job training in the region Number of students receiving information about careers in the region Number of people receiving training on economic development at CAPCOG workshops Number of requests for assistance completed for communities in the region Number of visitors to asset map and information clearinghouse on CAPCOG website Number of presentations on economic development given in the region Annual progress on the CEDS performance measures will be reported on the GPRA form submitted to EDA as well as on the CAPCOG website. 16

17 XI. Updates to the CEDS In addition to direct edits made to this strategic document, the following pages include annual updates to the Capital Area Economic Development District Comprehensive Economic Development Strategy for the years 2012 and

18 COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGY UPDATE CAPITAL AREA COUNCIL OF GOVERNMENTS

19 INTRODUCTION The 2012 Update to the Comprehensive Economic Development Strategy incorporates freshly released economic and demographic information on the Capital Area. Despite the inclusion of new data, the issues identified in the original Comprehensive Economic Development Strategy document remain relevant today. Estimates released by the U.S. Census Bureau in 2011 indicate that the Capita Area continues to experience phenomenal levels of population growth. In 2011, the Austin Metropolitan Statistical Area (MSA) experienced the second-highest rate of population growth among all metropolitan areas. With approximately 75 percent of such growth occurring outside of the City of Austin, accommodating population increases while advancing sustainable economic development has become one of the primary challenges for smaller communities throughout the Capital Area. While job growth remains below the region s 10-year historical average, job creation throughout the Capital Area remains relatively robust compared to most other U.S. metropolitan areas. Crucially, however, the success of economic development efforts within the Capital Area cannot be measured by job creation alone; the quality of the region s employment opportunities must also be taken into account. During the past decade, for example, the Capital Area has witnessed much higher levels of job growth in low-skill, low-wage occupations such as retail trade and leisure and hospitality in comparison to high-skill, high-wage jobs such as manufacturing and information. The result has been a decline in median household income among all counties in the Capital Area. Unfortunately, employment trends in 2010 continued to follow a pattern in which low-skill, low-wage industries outperformed many high-skill, high-wage industries. One emerging explanation for this dynamic is the significantly lower levels of educational attainment among many of the region s fastest growing minority groups. Without significant improvements in the educational attainment of existing residents especially minority residents the Capital Area will be increasingly dependent on migrants for human capital infusions that can support high-skill, high-wage job growth. In an attempt to underscore the need to address these troublesome trends, CAPCOG has embarked on an educational initiative throughout the region. CAPCOG is currently meeting with policymakers in each county in the region to provide information that highlights important trends in job creation, educational attainment, and wealth creation. These presentations combined with ongoing technical assistance bring attention to important challenges and provide communities throughout the Capital Area with the information necessary to make more informed decisions that promote economic opportunity for all residents throughout the region.

20 POPULATION PROJECTIONS In the years ahead, the Capital Area is projected to experience robust population growth. During the next five years, the population of the Capita Area is projected to increase by approximately 15 percent; by 2016 the projected population of the region is projected to approach 2.2 million. HISTORICAL & PROJECTED POPULATION GROWTH RATES ( ) 2,500,000 2,000,000 1,500,000 Within the 10-county Capital Area, projected population trends are expected to mirror recent growth dynamics. Williamson County is expected to experience the greatest population increase through 2016, with the projected growth exceeding 20 percent. Hays County is projected to witness population growth in excess of 19 percent, making it the second fastest growing county in the Capital Area. Burnet and Bastrop Counties are both projected to grow approximately 13 percent each, making them the third and fourth fastest growing counties in the Capital Area. Travis County, the most populous county in the Capital Area, is projected to grow a relatively modest 7 percent through ,000, , % 20% 15% 10% 5% 0% SOURCE: U.S. CENSUS BUREAU / TEXAS STATE DATA CENTER PROJECTED POPULATION GROWTH OF CAPITAL AREA ( ) 22.3% 19.1% 13.7% 12.8% 8.0% 7.3% 6.6% 7.1% 5.3% 4.5% SOURCE: U.S. CENSUS BUREAU / TEXAS STATE DATA CENTER

21 INDUSTRY The Capital Area added approximately 13,500 jobs in 2011 the strongest showing since Total employment in the region is currently 825,000. Although the overall economy of the Capital Area proved relatively resilient in 2011, the performance of individual industries varied significantly. Employment in the Mining sector, for example, surged more than 12 percentage in 2011 (still, mining remains a very small share of overall employment in the Capital Area). Other industries that experienced significant employment gains in 2011 included Administration & Waste Services (6.6 percent) and Construction (4.6 percent). The upswing in Construction is particularly encouraging, as the sector remains one of the biggest sources of middleclass wages in the region. Two historic stewards of the Capital Area economy, Government and Information, both suffered employment declines in Government employment, typically a source of stability within the Capital Area, declined 0.7 percent. Employment in Information, which features some of the region s highest wages, dropped by 3 percent. Agriculture, Forestry, Fishing and Hunting Mining Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and Leasing Professional and Technical Services Management of Companies Administrative and Waste Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation and Food Services Other Services Government Agriculture, Forestry, Fishing and Hunting Mining Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and Leasing Professional and Technical Services Management of Companies Administrative and Waste Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation and Food Services Other Services Government CAPITAL AREA JOBS BY INDUSTRY (2011) 0.2% 0.5% 0.3% 0.6% 1.2% 1.8% 2.4% 1.6% 1.3% 3.5% 4.0% 5.2% 6.3% 5.5% 6.3% 7.7% CAPITAL AREA JOBS BY INDUSTRY ( ) 9.4% 9.7% 10.8% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% -3.0% -1.3% -0.5% -0.9% -0.4% -0.7% 0.1% 1.5% 2.8% 2.9% 1.9% 1.7% 1.5% 1.3% 2.3% 2.2% 2.9% 4.6% 6.6% 21.6% SOURCE: EMSI -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 12.4% SOURCE: EMSI

22 EMPLOYMENT The unemployment rate in the Capital Area has been below the national unemployment rate for most of the past decade. Despite several consecutive months of employment gains, the national unemployment rate remains just above 8 percent (as of February 2012). Even during the greatest depths of the recession, the unemployment rate within the Capital Area never reached such heights. As of February 2012, the unemployment rate in the Capital Area was just 6 percent. Employment projections for the next five years reveal a rather encouraging future for the Capital Area. With one sole exception, every single employment sector in the Capital Area is expected to growth through On a proportional basis, the largest job increases are expected to occur in Educational Services (15.7 percent), Health care & Social Assistance (11.6 percent), and Professional & Technical Services (11.4 percent). Manufacturing is the lone sector expected to suffer net job losses; through 2016, jobs in the industry are projected to drop by 5.5 percent. Given the recent manufacturing renaissance in America, however, hopefully this projected decline will fail to materialize. 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% UNEMPLOYMENT RATE ( ) Mining Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and Leasing Professional and Technical Services Management of Companies Administrative and Waste Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation and Food Services Other Services Government EMPLOYMENT PROJECTIONS ( ) -5.5% 2.9% 5.5% 5.0% 3.8% 5.5% 4.5% 6.2% 7.0% 7.6% 9.6% 8.5% 8.4% 9.0% U.S. Capital Area SOURCE: BUREAU OF LABOR STATISTICS 11.4% 9.9% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 10.0% 11.6% 15.7% SOURCE: EMSI

23 EDUCATION The Capital Area is among the most educated places in the U.S. More than 40 percent of Capital Area residents over the age of 25 possess a bachelor s degree or higher. The region s high level of educational attainment is supported through its unparalleled ability to attract college educated migrants. Between 2007 and 2009, for example, Austin posted the country s highest average annual net migration of adults with a bachelor s degree. Unfortunately, there exists significant differences in the educational attainment of individual racial and ethnic groups. More than 46 percent of White residents and two-thirds of Asian residents within the Capital Area possess a college degree. In contrast, approximately 22 percent of Black residents and less than 16 percent of Hispanic residents possess a college degree. Without significant improvements in the educational attainment of existing residents especially minority residents it may be difficult for Central Texas to maintain one of its strongest competitiveness advantages. College attainment levels increased for all racial and ethnic groups in COLLEGE EDUATIONAL ATTAINMENT OF POPULATION AGE 25+ (2006/10) 50% 40% 30% 20% 10% 0% SOURCE: U.S. CENSUS BUREAU COLLEGE EDUATIONAL ATTAINMENT OF POPULATION AGE 25+ (2006/10) 75% 50% 25% 0% White Black Hispanic Asian SOURCE: U.S. CENSUS BUREAU

24 CHALLENGES While the Capital Area remains relatively resilient compared to many other regions throughout the country, job growth has not necessarily translated into wealth creation at an individual level. While observers often trumpet the Capita Area s absolute job gains, the quality of new employment opportunities is often overlooked. Many of the fastest growing employment sectors within the region are among the lowest-paying. At the same time, high-wage industries such as Manufacturing and Information have experienced employment declines during the past decade. The trend of higher job-growth among lower-paying industries is projected to continue through Another emerging challenge in the Capital Area is the region s geographic mismatch between workers and employment opportunities. Today, nearly half of all employed residents in the CAPCOG region cross a county line each day on their way to work. These employment dynamics will increasingly demand regional approaches to shared problems such as traffic congestion, infrastructure investment, and workforce training. CAPCOG REGION EMPLOYMENT GROWTH ( ) VS. AVERAGE SALARY (2011) VS. EMPLOYMENT SIZE (2011)* $100,000 $75,000 $50,000 $25,000 CONSTRUC MANUFACTURING WHOLESALE TRADE FINANCE & INSURANCE ADMINISTRATIVE & SUPPORT SERVICES RETAIL TRADE PROFESSIONAL, SCIENTIFIC & TECHINCAL SERVICES CONSTRUCTION GOVERNMENT ACCOMODATION & FOOD SERVICES HEALTH CARE & SOCIAL SERVICES $0-10% -5% 0% 5% 10% 15% * FOR 10 LARGEST EMPLOYMENT SECTORS SOURCE: EMSI PERCENTAGE OF CAPCOG WORKERS WHO CROSS A COUNTY LINE TO REACH THEIR PLACE OF EMPLOYMENT 60% 45.5% 46.4% 49.0% 50% 47.9% 40.2% 40.6% 41.9% 41.7% 42.2% 40% 30% 20% 10% 0% SOURCE: U.S. CENSUS BUREAU

25 COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGY UPDATE

26 INTRODUCTION The 2013 Update to the Comprehensive Economic Development Strategy (CEDS) features new analysis of economic and demographic trends affecting the Capital Area. The analysis presented confirms issues identified in the original CEDS document and subsequent updates. The objectives of the CEDS have been updated in order to refocus the region s efforts to become a leader in the clean energy industry, toward efforts to support the development of economically sustainable communities. Population continues to surge in the Capital Area, as illustrated by recent estimates by the U.S. Census Bureau and the Texas State Data Center. Population growth is widespread throughout the region, with new residential and mixed use development in the urban core contributing to strong growth in the City of Austin, while in migration from locations throughout the United States and new employment opportunities continue to fuel growth in surrounding communities. As employment levels in the Capital Area continue to build (decreasing the region s unemployment rate to well below the national average), the regional economy is continuing multi year trends that are leading to a more diverse mix of industries and reduced reliance on government related jobs. The region s strong population growth coupled with new assets in the area that support tourism, sports and entertainment, have led to particularly strong employment gains in the Real Estate, Accommodation, Food Services, and Retail Trade sectors. Meanwhile, the Capital Area s Technology sector continues to be a source of economic expansion. However, growth in this sector is increasingly focused in software over hardware related industry segments which, if continued, may produce certain effects that could impact the character of growth in the years ahead notably, the skills and education levels required, the type and location of real estate development and the performance of existing employment centers. Although the Capital Area economy is experiencing strong overall growth and new assets are in place or (as in the development of the University of Texas s new medical campus) are soon to be in place, there remain certain concerns relating to the region s ability to build a strong and sustainable economy. Of particular note is the weaker employment situation for certain segments of the population (i.e. minorities and residents without a bachelor s degree or above) and employment growth that continues to be concentrated in low wage industries. CAPCOG is continuing efforts already underway to work with policy makers and economic developers in the region to build a deeper understanding of the trends that are affecting the economy in the Capital Area, the assets that will support sustainable economic growth in the future, and the challenges that may be preventing some segments of the population from participating in and/or benefitting from the growing economy. These efforts which include regular economic analysis and related public outreach support regional policy makers and economic developers in activities that fulfill the objectives of the CEDS and enable any adjustments in strategy or tactics that may be required.

27 POPULATION PROJECTIONS The exceptional population growth experienced in the Capital Area over the past several years is projected to continue at a similar pace in the years to come. During the next five years, the population of the Capital Area is projected to increase by 12.6 percent, adding over 300 thousand people to the region by Among the 10 individual counties within the Capital Area, each is projected to increase its population over the next five years at a rate that exceeds that of the state as a whole. Whereas in the 2012 CEDS update Williamson County was projected to lead the area in growth, projections for the coming five year period indicate that Hays County is expected to grow fastest (27.9%) among the 10 counties. Williamson County is still expected to experience impressive growth of 23.2%. Travis County, the most populous county in the Capital Area, is projected to grow by over 11%, which is an accelerated pace over estimates featured in the 2012 CEDS update. All other counties in the Capital Area are projected to grow between 5.2% (Llano County) and 17.1% (Bastrop County) over the next five years. HISTORICAL & PROJECTED POPULATION GROWTH RATES ( ) 2,500,000 2,000,000 1,500,000 1,000, ,000 35% 30% 25% 20% 15% 10% 5% 0% % % 11.6% 14.1% 7.4% 27.9% SOURCE: U.S. CENSUS BUREAU / TEXAS STATE DATA CENTER PROJECTED POPULATION GROWTH OF CAPITAL AREA ( ) 7.4% 5.2% 11.6% 23.2% SOURCE: U.S. CENSUS BUREAU / TEXAS STATE DATA CENTER

28 INDUSTRY Over 11,700 jobs we added to the Capital Area in 2012, bringing total employment in the area to 836,770. Steady population growth and continued strength in tourism, sports, and entertainment are fueling growth in a number of industry sectors within the Capital Area, particularly Real Estate, Accommodation and Food Services, and Retail Trade. In 2012, the Information sector (which is particularly important to the Capital Area economy) rebounded from declines in 2011 to post gains of 11.2% year over year. The region s largest sector, Government, continued to decline in 2012, leading the Capital Area to increasingly rely on other industries as drivers of the economy. The sector that experienced the largest employment gains in the Capital Area during 2012 was Educational Services (26%) growth that is in large part attributable to continued population growth throughout the region and the stabilization of State resources. Transportation and Warehousing, on the other hand, experienced a sharp decline of 15%, which was far larger than the next largest declining sector, Utilities ( 4.5%). Agriculture, Forestry, Fishing and Hunting Mining Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and Leasing Professional and Technical Services Management of Companies Administrative and Waste Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation and Food Services Other Services Government Agriculture, Forestry, Fishing and Hunting Mining Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and Leasing Professional and Technical Services Management of Companies Administrative and Waste Services Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Accommodation and Food Services Other Services Government CAPITAL AREA JOBS BY INDUSTRY (2012) 0.2% 0.5% 0.2% 0.6% 1.5% 2.6% 1.7% 1.4% 1.3% 3.5% 4.0% 4.9% 6.3% 5.4% 6.3% 8.0% 10.2% CAPITAL AREA JOBS BY INDUSTRY ( ) 9.8% 10.9% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 15.0% 3.2% 4.5% 2.6% 3.7% 3.3% 3.4% 1.4% 3.7% 1.5% 2.7% 2.6% 1.9% 5.2% 7.7% 5.9% 6.3% 8.3% 11.2% 20.4% SOURCE: EMSI, BLS 20.0% 15.0% 10.0% 5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 26.0% SOURCE: EMSI, BLS